10 Great Stocks For The Next 10 Years

Our picks are not the usual suspects. Yet we think all of these stocks can quadruple in a decade.

- Daren Fonda

WARREN BUFFETT SAYS HE AIMS TO HOLD STOCKS FOREVER. WE’RE A BIT LESS patient, but we like playing the long game—picking a few solid companies and hanging on for years, even a decade or more. Investing for the long haul can smooth out the risks of buying individual stocks, which may tumble or stay depressed for ages before taking off. A company’s innovations could take years to bear fruit. Moreover, businesses with attractive growth often trade at lofty prices that may not be sustainable. The longer you stick with a stock that has stumbled, however, the greater the opportunity to recoup losses (assuming the business rebounds as well). With dividend-paying stocks, you can also pocket a bit of income while you wait.

The following 10 companies all possess attractive long-range prospects. Each should expand its sales and profits at rates well above the market average for years. Because these companies are not enormous, their stocks have a reasonable shot at quadrupling over the next 10 years (meaning annualized gains of 15%, or roughly double the projected return, including dividends, of the broad U.S. market).

Investing for the next decade doesn’t mean you can tuck these stocks away and forget about them. You’ll still need to follow them, and you may have to sell if cracks emerge in the business. Still, if these companies can build on their recent successes, they should deliver superb long-term returns, turning dips in their stock prices into distant memories.

(The stocks are listed alphabetically. Prices and other data are as of September 30. Price-earnings ratios are based on estimated year-ahead profits.)

Acuity Brands (symbol AYI)

SHARE PRICE: $265

MARKET CAPITALIZATION: $11.6 BILLION

PRICE-EARNINGS RATIO: 27

DIVIDEND YIELD: 0.2%